Estate of Encarnacion v Dizon

G.R. No. 148777

Facts:

Encarnacion Panlilio is the owner of disputed landholdings over a vast tract of land with an area
of 115.41 hectares called Hacienda Masamat located in Pampanga. Panlilio then entered into a lease
contract over the said landholdings with Paulina Mercado. Sometime in 1973, pursuant to the OLT under
PD 27, the Department of Agrarian Reform (DAR) issued thirty eight (38) Certificates of Land Transfer
(CLTs) to Panlilio’s tenants.

On November 26, 1973, lessee Paulina Mercado filed a letter-complaint with the DAR
questioning the issuance of CLTs to Panlilio’s tenants, alleging, among others, that the DAR should not
have issued the CLTs since the land involved was principally being planted with sugar and was outside
the coverage of PD 27. She claimed that respondents surreptitiously planted palay (rice plant) instead of
sugar in order to bring the land within the purview of the law. After proper investigation, the DAR
concluded that the CLTs were "properly and regularly issued."

ISSUE/S:

Whether or not the transfer made by Dizon was valid

HELD:

NO. The prohibition in PD 27, the Tenants Emancipation Decree, which took effect on October
21, 1972, states that "[t]itle to land acquired pursuant to this Decree or the Land Reform Program of the
Government shall not be transferable except by hereditary succession or to the Government in accordance
with the provisions of this Decree, the Code of Agrarian Reforms and other existing laws and
regulations.” Hereditary succession means succession by intestate succession or by will to the compulsory
heirs under the Civil Code, but does not pertain to testamentary succession to other persons.
"Government" means the DAR through the Land Bank of the Philippines which has superior lien by
virtue of mortgages in its favor.

Thus, PD 27 is clear that after full payment and title to the land is acquired, the land shall not be
transferred except to the heirs of the beneficiary or the Government. If the amortizations for the land have
not yet been paid, then there can be no transfer to anybody since the lot is still owned by the Government.
The prohibition against transfers to persons other than the heirs of other qualified beneficiaries stems
from the policy of the Government to develop generations of farmers to attain its avowed goal to have an
adequate and sustained agricultural production. With certitude, such objective will not see the light of day
if lands covered by agrarian reform can easily be converted for non-agricultural purposes.